. "Environmental Constraints and the Evolution of the Private Firm." The Industrial Green Game: Implications for Environmental Design and Management. Washington, DC: The National Academies Press, 1997.
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The Industrial Green Game: Implications for Environmental Design and Management
state. The question of whether firms, especially large transnationals, are participating in the devolution of the nation-states' responsibilities to others, including both local and international political units, is fascinating but far beyond the scope of this paper. Nonetheless, the trends discussed in this paper can be seen as elements of what appears to be currently accelerating shifts of power and responsibilities among political and economic entities at all levels.
Any economy consists of a number of agents—suppliers, consumers, regulators, etc. Additionally, some interesting work is being done on the self organization of loosely linked groups of firms that form frequently successful and innovative industrial districts, such as Silicon Valley in the United States, or the collection of textile firms near Florence, Italy, known as ''The Third Italy." This discussion, however, is limited to the class of agents identified as for-profit private corporations, primarily because any broader discussion would be far too complex for a short paper. Note that in any such analysis, only a limited class of agents is being considered and that these agents both modify and are modified by—coevolve—all other elements of the system.
Such a substitution of inputs is already evident in the transportation sector, where advanced computing technology, on-board electronic systems, sensors, and other information systems are being used to meet increasingly stringent environmental constraints. See, generally, Auzins and Wilhelm, 1994; The Economist, 1994.
Note that this is a separate issue from the so-called green accounting problem, arising when management accounting systems include environmental costs and liabilities in overhead, thus reducing the ability of managers to identify and reduce such costs and the associated environmental impacts (Macve, this volume; Todd, 1994). Social costs are not included in management accounting systems.
Not in all cases. Note, for example, the structure of postconsumer take-back in the automobile industry in the United States: Some 65 to 70 percent of automobiles by weight are recycled, and many subassemblies are refurbished (rebuilt) and placed back into commerce without any explicit control mechanism. A wide variety of parts dealers, junkyards, scrap operators, and secondary smelters have formed a very effective recycling system, organized only through mutual economic self-interest (Klimisch, 1994). The self-organizing properties of complex systems cannot be overlooked, but more study is required to learn what conditions favor the evolution of such behavior. Why are white goods or electronic items not similarly recycled? What boundary conditions might result in the self-organization of a similar system for such products? More pessimistically, what changes in current policies might result in the disruption of an already fairly efficient demanufacturing operation?
The need for firms to integrate technology and environment throughout their operations and recognize environmental issues as strategic for the firm is arising just as the shift from regional and nation-state to global economic competition (at least among developed countries) and from internal management based on mass manufacturing paradigms to information-based non-hierarchical models is occurring. Environmental issues then become one of several forces fostering radical change in the firm, and such change is easier when more than one driver is at work. In some ways, the process appears analogous to punctuated evolution, but consideration of whether this is only a superficial similarity or evidence of some deeper similarity based on principles of behavior of complex systems is beyond the scope of this paper.
The reader will have noted, possibly skeptically, that this paper assumes that sustainability can be achieved without social, economic, or natural upheavals. This is, indeed, only an assumption, as the author is not aware of any data that convincingly support such an optimistic conclusion. However, it seems best in this matter to adhere to the philosophy of pragmatism espoused by William James and act as if sustainability is achievable, lest, by the failure to act, the opposite become a self-fulfilling prophecy.